Future Farm Ownership
Nigel Pannett
Compass Agribusiness Management do• Family Business Transition Planning
• Equity Partnership Facilitation– Managing processes involved in forming successful farming partnerships– Introduction of potential partners/investors
• Direct Investment – Representing investors interests where direct investment is more desirable
For Both Investment Types:
Management contracts
Financial management & book keeping
Governance & business advisory
Identification & assistance with procurement of properties
“Farmers are getting Older Across Industries”
• The Family Farming Business in Australia needs to evolve to survive and be competitive in the future ”
• “In Australia there is a large void between the familyfarm and the corporate model”
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The Future…..
Agricultural in Australia• Other Ownership Models
– MIS– Corporate Models– Foreign Ownership– Public Companies– Private Joint Ventures
• How will farm ownership evolve in the next 10‐15 years? How will the family farm evolve?
What is an Equity Partnership?
• A joint venture between individuals and investors –groups pooling their capital to maximize revenue and capital growth.
• Generally one of the partners is employed as the farm manager.
ABC Equity Partnership
LandStockPlant
Investor #1
Bank
Investors Agreement
Security
Lending
Exit ProcedureEmployment Agreement
Business StrategyShareholders InputDividend Strategy
Manager’s Salary
Equity Partnerships
Investor #2
Investor #3
Investor Equity
Manager
Equity Required
Advantages – Manager Investor• Ability to grow wealth and income
• Opportunity for a share in land ownership for skilled managers
• Pathway to farm ownership
• Ability to attract capital for scalable business model
Advantages – Investor• Access to top performing farm managers – financial buy in
across business
• Access to desirable landholdings
• Geographical and industry diversification
• Management structure with industry expertise
• Ability to bring your own skills to the business
• Ability to achieve financial interest in Agriculture
Disadvantages• Control of the business is shared
• Decision making process may be slower and may involve compromise (this does not mean the decision is poorer)
• Medium to long term investment
• Liquidity of investment can vary
• Limited access to Capital
Investments in EP’s• Finding the right investors is the key
• Invest with top performers
• Mutual goals with sensible governance
• Get the right advice
“We are looking for motivated Managers and investors to be involved in these types of partnerships”
• Direct investment can often be a better option for certain investors
Farm Profitability
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Source: Red Sky Agriculture Pty Ltd, Jan 20014